Alternative Solutions To Protect Retirement Assets

Alternative Solutions To Protect Retirement Assets

Many people work a lifetime to accumulate assets designed to provide them with a comfortable retirement plus an inheritance for their children.

The last thing people want to do is use their assets to pay for the long-term care services they’re likely to need.

Numbers For Consideration

Let’s say your client has $400,000 in an account intended to cover living expenses during retirement.  She plans to withdraw $7,500 per month.  How long do you think the money will last?

Account Balance Monthly Withdrawal How Long Will it Last?


Earning 3% compounded monthly


Inflating by 3% per year

58 months

Faced with the need for long-term care services, your client may quickly discover $7,500 doesn’t cover the additional cost of care.

Consider these monthly costs:

$7,350 per month

For a semiprivate room in a nursing home

$4,245 per month

For care in an assisted living facility

$3,872 per


for the services of a home health aide

Which Asset Will You Use?

This is a good question to pose to potential clients who are concerned about protecting their retirement assets.  While most people have designated assets for specific purposes, they probably haven’t set anything aside to pay for long-term care services.

A long-term care situation could mean:

  • Liquidating assets to pay for care at inopportune times.  This includes dipping into 401(k) or savings accounts, cashing in stocks or CDs or selling property
  • Paying unexpected capital gains tax, income tax and potential surrender charges generated from the liquidation of assets
  • Foregoing any returns the liquidated assets were expected to generate in future years
  • Abandoning plans to leave an inheritance for children or grandchildren

Advantages to Having a Plan in Place

When the need for long-term care arises, having a policy in place to help cover the cost of care means a client’s retirement assets and plan can remain intact.  This added measure of protection can allow your client to:

  • Retain retirement assets for their intended purpose
  • Avoid having to liquidate assets to pay for long-term care services
  • Maintain the retirement lifestyle as planned while also receiving benefits to help pay for the care they need
  • Ensure sufficient assets remain in the estate to serve as an inheritance

Contact your LTCi Specialist for guidance in identifying the best plan for each of your clients’ needs.